Apr 29, 2011

Cheneygotsomethingright

http://www.atimes.com/atimes/Global_Economy/MD29Dj01.html

Cheney got something right By Ellen Brown

"Deficit terrorists" are gutting governments and forcing the privatization of public assets, all in the name of "deficit reduction". But deficits aren't actually a bad thing. In today's monetary scheme, in which most money comes from debt, debt and deficits are actually necessary to have a stable money supply. The public debt is the people's money.

Former vice president Dick Cheney famously said, "Deficits don't matter." A staunch Republican, he was arguing against raising taxes on the rich; but today Republicans seem to have forgotten this maxim. They are bent on stripping social programs, privatizing public assets, and gutting unions, all in the name of "deficit reduction".

Worse, Standard & Poor's has now taken up the hatchet. Some bloggers are calling it blackmail. This private, for-profit rating agency, with a dubious track record of its own, is dictating government policy, threatening to downgrade the government's long-held triple AAA credit rating if congress fails to deal with its deficit in sufficiently draconian fashion. The threat is a real one, as we've seen with the devastating effects of downgrades in Greece, Ireland and other struggling countries. Lowered credit ratings force up interest rates and cripple national budgets.

The biggest threat to the dollar's credit rating, however, may be the game of chicken being played with the federal debt ceiling. Nearly 70% of Americans are said to be in favor of a freeze on May 16, when the ceiling is due to be raised; and Tea Party-oriented politicians could go along with this scheme to please their constituents.

If they get what they wish for, the party could be over for the whole economy. The Chinese are dumping US Treasuries, and the Fed is backing off from its "quantitative easing" program, in which it has been buying federal securities with money simply created on its books.

When the Fed buys Treasuries, the government gets the money nearly interest-free, since the Fed rebates its profits to the government after deducting its costs. When the Chinese and the Fed quit buying Treasuries, interest rates are liable to shoot up; and with a frozen debt ceiling, the government would have to default, since any interest increase on a US$14 trillion debt would be a major expenditure.

Today the Treasury is paying a very low 0.25% on securities of nine months or less, and interest on the whole debt is about 3% (a total of $414 billion on a debt of $14 trillion in 2010). Greece is paying 4.5% on its debt, and Venezuela is paying 18% - six times the 3% we're paying on ours. Interest at 18% would add $2 trillion to our tax bill. That would mean paying three times what we're paying now in personal income taxes (projected to be a total of $956 billion in 2011), just to cover the interest.

There are other alternatives. Congress could cut the military budget - but it probably won't, since this option is never even discussed. It could raise taxes on the rich, but that probably won't happen either. A third option is to slash government services. But which services? How about social security? Do you really want to see Grandma panhandling? Congress can't agree on a budget for good reason: there is no good place to cut.

Fortunately, there is a more satisfactory solution. We can sit back, relax, and concede that Cheney was right. Deficits aren't necessarily a bad thing! They don't matter, so long as they are at very low interest rates; and they can be kept at these very low rates either by maintaining our triple A credit rating or by borrowing from the Fed essentially interest-free.

The yin and yang of money

Under our current monetary scheme, debt and deficits not only don't matter but are actually necessary in order to maintain a stable money supply. The reason was explained by Marriner Eccles, governor of the Federal Reserve Board, in hearings before the House Committee on Banking and Currency in 1941. Wright Patman asked Eccles how the Federal Reserve got the money to buy government bonds.
"We created it," Eccles replied.
"Out of what?"
"Out of the right to issue credit money."
"And there is nothing behind it, is there, except our government's credit?"
"That is what our money system is," Eccles replied. "If there were no debts in our money system, there wouldn't be any money."

That could explain why the US debt hasn't been paid off since 1835. It has just continued to grow, and the economy has grown and flourished along with it. A debt that is never paid off isn't really a debt. Financial planner Mark Pash calls it a National Monetization Account. Government bonds (or debt) are "monetized" (or turned into money). Government bonds and dollar bills are the yin and yang of the money supply, the negative and positive sides of the national balance sheet. To have a plus-1 on one side of the balance sheet, a minus-1 needs to be created on the other.

Except for coins, all of the money in the US money supply now gets into circulation as a debt to a bank (including the Federal Reserve, the central bank). But private loans zero out when they are repaid. In order to keep the money supply fairly constant, some major player has to incur debt that never gets paid back; and this role is played by the federal government.

That explains the need for a federal debt, but what about the "deficit" (the amount the debt has to increase to meet the federal budget)? Under the current monetary scheme, deficits are also necessary to avoid recessions.

Here is why. Private banks always lend at interest, so more money is always owed back than was created in the first place. In fact investors of all sorts expect more money back than they paid. That means the debt needs to be not only maintained but expanded to keep the economy functioning. When the Fed "takes away the punch bowl" by tightening credit, there is insufficient money to pay off debts; people and businesses go into default; and the economy spins into a recession or depression.

Maintaining a deficit is particularly important when the private lending market collapses, as it did in 2008 and 2009. Then debt drops off and so does the money supply. Too little money is available to buy the goods on the market, so businesses shut down and workers get laid off, further reducing demand, precipitating a recession. To reverse this deflationary cycle, the government needs to step in with additional public debt to fill the breach.

Debt and productivity

The US federal debt that is setting off alarm bells today is about 60% of gross domestic product (GDP), but it has been much higher than that. It was 120% of GDP during World War II, which turned out to be our most productive period ever. The US built the machinery and infrastructure that set the nation up to lead the world in productivity for the next half century. We, the children and grandchildren of that era, were not saddled with a crippling debt but lived quite well for the next half century. The debt-to-GDP ratio got much lower after the war, not because people sacrificed to pay back the debt, but because the country got so productive that GDP rose to meet it.

That could explain the anomaly of Japan, the global leader today in deficit spending. In a CIA Factbook list of debt to GDP ratios of 132 countries in 2010, Japan topped the list at 226%. So how has it managed to retain its status as the world's third largest economy? Its debt has not crippled its economy because:
(a) the debt is at very low interest rates; (b) it is owed to the people themselves, not to the International Monetary Fund or other foreign creditors; and
(c) the money created by the debt has been used to produce goods and services, allowing supply and demand to increase together and prices to remain stable.

The Japanese economy has been called "stagnant", but according to a review by Robert Locke, this is because the Japanese aren't aiming for growth. They are aiming for sustainability and a high standard of living. They have replaced quantity of goods with quality of life. Locke wrote in 2004:
Contrary to popular belief, Japan has been doing very well lately, despite the interests that wish to depict her as an economic mess. The illusion of her failure is used by globalists and other neo-liberals to discourage Westerners, particularly Americans, from even caring about Japan's economic policies, let alone learning from them. [And] it has been encouraged by the Japanese government as a way to get foreigners to stop pressing for changes in its neo-mercantilist trade policies.
The Japanese economy was doing very well until 1988, when the Bank for International Settlements raised bank capital requirements. The Japanese banks then tightened credit and lent only to the most creditworthy borrowers. Private debt fell off and so did the money supply, collapsing the stock market and the housing bubble. The Japanese government then started spending, and it got the money by borrowing; but it borrowed mainly from its own government-owned banks.

The largest holder of its federal debt is Japan Post Bank, a 100% government-owned commercial bank that is now the largest depository bank in the world. The Bank of Japan, the nation's government-owned central bank, also funds the government's debt. Interest rates have been lowered to nearly zero, so the debt costs the government almost nothing and can be rolled over indefinitely.

Japan's economy remains viable although its debt-to-GDP ratio is nearly four times that of the United States because the money does not leave the country to pay off foreign creditors. Rather, it is recycled into the Japanese economy. As economist Hazel Henderson points out, Japan's debt is twice its GDP only because of an anomaly in how GDP is calculated: it omits government-provided services. If they were included, Japan's GDP would be much higher and its debt to GDP ratio would be more in line with that of other countries.

Investments in education, healthcare, and social security may not count as "sales", but they improve both the standard of living of the people and national productivity. Businesses that don't have to pay for healthcare can be more profitable and competitive internationally. Families that don't have to save hundreds of thousands of dollars to put their children through college can spend on better housing, more vacations, and other consumer items.

Turning the national debt into a public utility

Locke calls the Japanese model "a capitalist economy with socialized capital markets". The national debt has been "monetized" - turned into the national money supply. The credit of the nation has been turned into a public utility.

Thomas Hoenig, president of the Kansas City Federal Reserve, maintains that the largest US banks should be put in that category as well. At the National Association of Attorneys General conference on April 12, he said that the 2008 bank bailouts and other implicit guarantees effectively make the too-big-to-fail banks government-guaranteed enterprises, like mortgage finance companies Fannie Mae and Freddie Mac. He said they should be restricted to commercial banking and barred from investment banking.

"You're a public utility, for crying out loud," he said.

The direct way for the government to fund its budget would have been to simply print the money debt-free. Wright Patman, chairman of the House Banking and Currency Committee in the 1960s, wrote:
When our Federal Government, that has the exclusive power to create money, creates that money and then goes into the open market and borrows it and pays interest for the use of its own money, it occurs to me that that is going too far. ... [I]t is absolutely wrong for the Government to issue interest-bearing obligations. ... It is absolutely unnecessary.

But that is the system that we have. Deficits don't matter in this scheme, but the interest does. If we want to keep the interest tab very low, we need to follow the Japanese and borrow the money from ourselves through our own government-owned banks, essentially interest-free. "The full faith and credit of the United States" needs to be recognized and dispensed as a public utility.

Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org. In Web of Debt, her latest of 11 books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are webofdebt.com andellenbrown.com.

Apr 27, 2011

AgoodwordfortheChristians

I am in total agreement with Tony Benn, UK political figure, that if he had his way the Salvation Army would be made the state religion, being the one and only "Christian" group that actually carries out the Christian mission. Good on yer, Tony, with you all the way.

In similar forgiving and praising vein, allow me to nominate a world head of the Christian mission, one Desmond Tutu of South Africa. Is it possible to be a total Christian believer, without any of the loony trappings of spaceships, a nationalist who believes he has witnessed the liberation of his people by Divine Grace, and be totally thankful and forgiving about the whole shabby past? Nothing to it, Mr. Tutu will do it with a joke. Alhamdulillah, rab al alameen.

Never forget the superiority of the Roman Catholic (Douai) version of Christmas message, not “Peace on earth, good will towards men” but “Peace on earth to men of good will.” If you are not one of the willing (and paid) hacks of the mighty, but a person of good will, all kinds of good things await you, and as for the servants of the evil doers, they will be cast into the outer darkness where there is wailing and gnashing of teeth. Yay, verily. Don’t worry about it. Look to Hexagram 40, Deliverance, of the I Ching for guidance.

People of good will don’t disagree about anything much, really. Keep the faith.

Apr 26, 2011

NamaAmidaButsu

Why are humans born? To enjoy themselves at ease. Lotus Sutra

Apr 16, 2011

Avengingplanet

http://www.tomdispatch.com/post/175379/tomgram%3A_michael_klare%2C_avenging_planet/#more

Tomgram: Michael Klare, Avenging Planet Posted by Michael Klare at 7:47am, April 14, 2011.

Last Monday, Yukio Edano, chief cabinet secretary, defended the Japanese government’s response to the nuclear disaster at Fukushima, insisting that the plant complex is in “a stable situation, relatively speaking.” That’s somewhat like the official description of 11,500 tons of water purposely dumped into the ocean waters off Fukushima as “low-level radioactive” or “lightly radioactive.” It is, of course, only “lightly” so in comparison to the even more radioactive water being stored at the plant in its place. But that’s the thing with descriptive words: they can leave so much to the eye of the beholder -- and the Japanese government hasn’t been significantly more eager than the Tokyo Electric Power Company (Tepco), which runs the complex, to behold all that much when it comes to Fukushima.

On Tuesday, the government finally raised the Fukushima alert level on the International Nuclear Event scale from 5 to 7 -- “a major accident” -- the highest category possible, only previously used for the 1986 Chernobyl nuclear disaster (which resulted in a 15,000-square-mile “dead zone” in the Ukraine). Though government officials rushed to play down the Chernobyl comparison, a Tepco official offered this ominously bet-hedging comment: “Our concern is that the amount of leakage could eventually reach that of Chernobyl or exceed it.”

In fact, on our punch-drunk planet, we’ve never seen anything like what’s underway at Fukushima -- not one, but four adjacent nuclear reactors, three of which seem to have suffered partial meltdowns, and several containment pools for “spent” fuel (which, in terms of radioactivity, is anything but spent) in various states of distress. Meanwhile, talk about the weeks needed to bring the situation under control has faded into perilous months, years, decades, even a century of cleanup and recovery. There is speculation that some of the core of at least one reactor has already “leaked from its steel pressure vessel into the bottom of [its] containment structure” -- and every action to bring the complex under some kind of control only seems to create, or threatens to create, other unexpected problems (like that “lightly radioactive” water).

Meanwhile, amid further giant aftershocks from the 9.0 earthquake of March 11th (with possibly years more of them to come), the Japanese government has been slowly widening the 20-kilometer “evacuation zone” (recently described by a visitor as an eerie “death zone... like an episode of Rod Serling’s Twilight Zone crossed with The Day After -- an apocalyptic vision of life in the nuclear age”) around the complex. Just this week, it began warning pregnant women and children to stay out of certain areas up to 30 kilometers away from the plant. That’s not surprising, considering that in a small number of soil tests taken outside that 30-kilometer zone -- in one case 40 kilometers from Fukushima -- cesium-137 (half-life 30 years) has been found at levels that exceed those which, at Chernobyl, forced residents to move away. Many of the hundreds of thousands of Japanese who once lived in these areas (and if things get worse, beyond them) may never go home.

Whatever happens at Fukushima, could there be a more striking warning that we humans have been overreaching and that our planet has a way of offering penalties for such hubris? And keep in mind, the Japanese are hardly in this alone. After all, in the United States, at least five nuclear reactors are situated in “in earthquake-prone seismic zones,” according to a recent report, which doesn’t even include the Indian Point nuclear reactor built on an earthquake fault only 30 miles from downtown New York City, my hometown.

Perhaps, as TomDispatch regular Michael Klare, author of Rising Powers, Shrinking Planet, suggests, it’s time to recalibrate when it comes to the way we’re treating planet Earth -- before it’s too late. Tom

The Planet Strikes Back

Why We Underestimate the Earth and Overestimate Ourselves By Michael T. Klare

In his 2010 book, Eaarth: Making a Life on a Tough New Planet, environmental scholar and activist Bill McKibben writes of a planet so devastated by global warming that it’s no longer recognizable as the Earth we once inhabited. This is a planet, he predicts, of “melting poles and dying forests and a heaving, corrosive sea, raked by winds, strafed by storms, scorched by heat.” Altered as it is from the world in which human civilization was born and thrived, it needs a new name -- so he gave it that extra “a” in “Eaarth.”

The Eaarth that McKibben describes is a victim, a casualty of humankind’s unrestrained consumption of resources and its heedless emissions of climate-altering greenhouse gases. True, this Eaarth will cause pain and suffering to humans as sea levels rise and croplands wither, but as he portrays it, it is essentially a victim of human rapaciousness.

With all due respect to McKibben’s vision, let me offer another perspective on his (and our) Eaarth: as a powerful actor in its own right and as an avenger, rather than simply victim.

It’s not enough to think of Eaarth as an impotent casualty of humanity’s predations. It is also a complex organic system with many potent defenses against alien intervention -- defenses it is already wielding to devastating effect when it comes to human societies. And keep this in mind: we are only at the beginning of this process.

To grasp our present situation, however, it’s necessary to distinguish between naturally recurring planetary disturbances and the planetary responses to human intervention. Both need a fresh look, so let’s start with what Earth has always been capable of before we turn to the responses of Eaarth, the avenger.

Overestimating Ourselves

Our planet is a complex natural system, and like all such systems, it is continually evolving. As that happens -- as continents drift apart, as mountain ranges rise and fall, as climate patterns shift -- earthquakes, volcanoes, tsunamis, typhoons, prolonged droughts, and other natural disturbances recur, even if on an irregular and unpredictable basis.

Our predecessors on the planet were deeply aware of this reality. After all, ancient civilizations were repeatedly shaken, and in some cases shattered, by such disturbances. For example, it is widely believed that the ancient Minoan civilization of the eastern Mediterranean collapsed following a powerful volcanic eruption on the island of Thera (also called Santorini) in the mid-second millennium BCE. Archaeological evidence suggests that many other ancient civilizations were weakened or destroyed by intense earthquake activity. In Apocalypse: Earthquakes, Archaeology, and the Wrath of God, Stanford geophysicist Amos Nur and his co-author Dawn Burgess argue that Troy, Mycenae, ancient Jericho, Tenochtitlan, and the Hittite empire may have fallen in this manner.

Faced with recurring threats of earthquakes and volcanoes, many ancient religions personified the forces of nature as gods and goddesses and called for elaborate human rituals and sacrificial offerings to appease these powerful deities. The ancient Greek sea-god Poseidon (Neptune to the Romans), also called “Earth-Shaker,” was thought to cause earthquakes when provoked or angry.

In more recent times, thinkers have tended to scoff at such primitive notions and the gestures that went with them, suggesting instead that science and technology -- the fruits of civilization -- offer more than enough help to allow us to triumph over the Earth’s destructive forces. This shift in consciousness has been impressively documented in Clive Ponting’s 2007 volume, A New Green History of the World. Quoting from influential thinkers of the post-Medieval world, he shows how Europeans acquired a powerful conviction that humanity should and would rule nature, not the other way around. The seventeenth century French mathematician RenĂ© Descartes, for example, wrote of employing science and human knowledge so that “we can… render ourselves the masters and possessors of nature.”

It’s possible that this growing sense of human control over nature was enhanced by a period of a few hundred years in which there may have been less than the usual number of civilization-threatening natural disturbances. Over those centuries, modern Europe and North America, the two centers of the Industrial Revolution, experienced nothing like the Thera eruption of the Minoan era -- or, for that matter, anything akin to the double whammy of the 9.0 earthquake and 50-foot-high tsunami that struck Japan on March 11th. This relative immunity from such perils was the context within which we created a highly complex, technologically sophisticated civilization that largely takes for granted human supremacy over nature on a seemingly quiescent planet.

But is this assessment accurate? Recent events, ranging from the floods that covered 20% of Pakistan and put huge swathes of Australia underwater to the drought-induced fires that burned vast areas of Russia, suggest otherwise. In the past few years, the planet has been struck by a spate of major natural disturbances, including the recent earthquake-tsunami disaster in Japan (and its many powerful aftershocks), the January 2010 earthquake in Haiti, the February 2010 earthquake in Chile, the February 2011 earthquake in Christchurch, New Zealand, the March 2011 earthquake in Burma, and the devastating 2004 Indian Ocean earthquake-tsunami that killed more than 230,000 people in 14 countries, as well as a series of earthquakes, tsunamis, and volcanic eruptions in and around Indonesia.

If nothing else, these events remind us that the Earth is an ever-evolving natural system; that the past few hundred years are not necessarily predictive of the next few hundred; and that we may, in the last century in particular, have lulled ourselves into a sense of complacency about our planet that is ill-deserved. More important, they suggest that we may -- and I emphasize may -- be returning to an era in which the frequency of the incidence of such events is on the rise.

In this context, the folly and hubris with which we’ve treated natural forces comes strongly into focus. Take what’s happening at the Fukushima Daiichi nuclear power complex in northern Japan, where at least four nuclear reactors and their adjoining containment pools for “spent” nuclear fuel remain dangerously out of control. The designers and owners of the plant obviously did not cause the earthquake and tsunami that have created the present peril. This was a result of the planet’s natural evolution -- in this case, of the sudden movement of continental plates. But they do bear responsibility for failing to anticipate the potential for catastrophe -- for building a reactor on the site of frequent past tsunamis and assuming that a human-made concrete platform could withstand the worst that nature has to offer. Much has been said about flaws in design at the Fukushima plant and its inadequate backup systems. All this, no doubt, is vital, but the ultimate cause of the disaster was never a simple design flaw. It was hubris: an overestimation of the power of human ingenuity and an underestimation of the power of nature.

What future disasters await us as a result of such hubris? No one, at this point, can say with certainty, but the Fukushima facility is not the only reactor built near active earthquake zones, or at risk from other natural disturbances. And don’t just stop with nuclear plants. Consider, for instance, all those oil platforms in the Gulf of Mexico at risk from increasingly powerful hurricanes or, if cyclones increase in power and frequency, the deep-sea ones Brazil is planning to construct up to 180 miles off its coast in the Atlantic Ocean. And with recent events in Japan in mind, who knows what damage might be inflicted by a major earthquake in California? After all, California, too, has nuclear plants sited ominously near earthquake faults.

Underestimating Eaarth

Hubris of this sort is, however, only one of the ways in which we invite the planet’s ire. Far more dangerous and provocative is our poisoning of the atmosphere with the residues of our resource consumption, especially of fossil fuels. According to the U.S. Department of Energy, total carbon emissions from all forms of energy use had already hit 21.2 billion metric tons by 1990 and are projected to rise ominously to 42.4 billion by 2035, a 100% increase in less than half a century. The more carbon dioxide and other greenhouse gases we dump into the atmosphere, the more we alter the planet’s natural climatic systems and damage other vital ecological assets, including oceans, forests, and glaciers. These are all components of the planet’s integral makeup, and when damaged in this way, they will trigger defensive feedback mechanisms: rising temperatures, shifting rainfall patterns, and increased sea levels, among other reactions.

The notion of the Earth as a complex natural system with multiple feedback loops was first proposed by environmental scientist James Lovelock in the 1960s and propounded in his 1979 book, Gaia: A New Look at Life on Earth. (Lovelock appropriated the name of the ancient Greek goddess Gaia, the personification of Mother Earth, for his version of our planet.) In this and other works, Lovelock and his collaborators argue that all biological organisms and their inorganic surroundings on the planet are closely integrated to form a complex and self-regulating system, maintaining the necessary conditions for life -- a concept they termed “the Gaia Hypothesis.” When any parts of this system are damaged or altered, they contend, the others respond by attempting to repair, or compensate for, the damage in order to restore the essential balance.

Think of our own bodies when attacked by virulent microorganisms: our temperature rises; we produce more white blood cells and other fluids, sleep a lot, and deploy other defense mechanisms. When successful, our bodies’ defenses first neutralize and eventually exterminate the invading germs. This is not a conscious act, but a natural, life-saving process.

Eaarth is now responding to humanity’s depredations in a similar way: by warming the atmosphere, taking carbon from the air and depositing it in the ocean, increasing rainfall in some areas and decreasing it elsewhere, and in other ways compensating for the massive atmospheric infusion of harmful human emissions.

But what Eaarth does to protect itself from human intervention is unlikely to prove beneficial for human societies. As the planet warms and glaciers melt, sea levels will rise, inundating coastal areas, destroying cities, and flooding low-lying croplands. Drought will become endemic in many once-productive farming areas, reducing food supplies for hundreds of millions of people. Many plant and animal species that are key to human livelihoods, including various species of trees, food crops, and fish, will prove incapable of adjusting to these climate changes and so cease to exist. Humans may -- and again I emphasize that may -- prove more successful at adapting to the crisis of global warming than such species, but in the process, multitudes are likely to die of starvation, disease, and attendant warfare.

Bill McKibben is right: we no longer live on the “cozy, taken-for-granted” planet formerly known as Earth. We inhabit a new place, already changed dramatically by the intervention of humankind. But we are not acting upon a passive, impotent entity unable to defend itself against human transgression. Sad to say, we will learn to our dismay of the immense powers available to Eaarth, the Avenger.

Michael T. Klare is a professor of peace and world security studies at Hampshire College, a TomDispatch regular, and the author, most recently, of Rising Powers, Shrinking Planet. A documentary movie version of his previous book, Blood and Oil, is available from the Media Education Foundation.

Copyright 2011 Michael T. Klare

Apr 14, 2011

Libya

http://www.atimes.com/atimes/Middle_East/MD14Ak02.html

Libya all about oil, or central banking? By Ellen Brown

Several writers have noted the odd fact that the Libyan rebels took time out from their rebellion in March to create their own central bank - this before they even had a government. Robert Wenzel wrote in the Economic Policy Journal:

“I have never before heard of a central bank being created in just a matter of weeks out of a popular uprising. This suggests we have a bit more than a rag tag bunch of rebels running around and that there are some pretty sophisticated influences.”

Alex Newman wrote in the New American:

“In a statement released last week, the rebels reported on the results of a meeting held on March 19. Among other things, the supposed rag-tag revolutionaries announced the "[d]esignation of the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and appointment of a Governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.”

Newman quoted CNBC senior editor John Carney, who asked, “Is this the first time a revolutionary group has created a central bank while it is still in the midst of fighting the entrenched political power? It certainly seems to indicate how extraordinarily powerful central bankers have become in our era.”

Another anomaly involves the official justification for taking up arms against Libya. Supposedly it's about human rights violations, but the evidence is contradictory. According to an article on the Fox News website on February 28:
As the United Nations works feverishly to condemn Libyan leader Muammar al-Qaddafi for cracking down on protesters, the body's Human Rights Council is poised to adopt a report chock-full of praise for Libya's human rights record.

The review commends Libya for improving educational opportunities, for making human rights a "priority" and for bettering its "constitutional" framework. Several countries, including Iran, Venezuela, North Korea, and Saudi Arabia but also Canada, give Libya positive marks for the legal protections afforded to its citizens - who are now revolting against the regime and facing bloody reprisal.

Whatever might be said of Gaddafi's personal crimes, the Libyan people seem to be thriving. A delegation of medical professionals from Russia, Ukraine and Belarus wrote in an appeal to Russian President Dmitry Medvedev and Prime Minister Vladimir Putin that after becoming acquainted with Libyan life, it was their view that in few nations did people live in such comfort:

"[Libyans] are entitled to free treatment, and their hospitals provide the best in the world of medical equipment. Education in Libya is free, capable young people have the opportunity to study abroad at government expense. When marrying, young couples receive 60,000 Libyan dinars (about 50,000 US dollars) of financial assistance. Non-interest state loans, and as practice shows, undated. Due to government subsidies the price of cars is much lower than in Europe, and they are affordable for every family. Gasoline and bread cost a penny, no taxes for those who are engaged in agriculture. The Libyan people are quiet and peaceful, are not inclined to drink, and are very religious."

They maintained that the international community had been misinformed about the struggle against the regime. "Tell us," they said, "who would not like such a regime?"

Even if that is just propaganda, there is no denying at least one very popular achievement of the Libyan government: it brought water to the desert by building the largest and most expensive irrigation project in history, the US$33 billion GMMR (Great Man-Made River) project. Even more than oil, water is crucial to life in Libya.

The GMMR provides 70% of the population with water for drinking and irrigation, pumping it from Libya's vast underground Nubian Sandstone Aquifer System in the south to populated coastal areas 4,000 kilometers to the north. The Libyan government has done at least some things right.

Another explanation for the assault on Libya is that it is "all about oil", but that theory too is problematic. As noted in the National Journal, the country produces only about 2% of the world's oil. Saudi Arabia alone has enough spare capacity to make up for any lost production if Libyan oil were to disappear from the market. And if it's all about oil, why the rush to set up a new central bank?

Another provocative bit of data circulating on the Net is a 2007 "Democracy Now" interview of US General Wesley Clark (Ret). In it he says that about 10 days after September 11, 2001, he was told by a general that the decision had been made to go to war with Iraq. Clark was surprised and asked why. "I don't know!" was the response. "I guess they don't know what else to do!" Later, the same general said they planned to take out seven countries in five years: Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran.

What do these seven countries have in common? In the context of banking, one that sticks out is that none of them is listed among the 56 member banks of the Bank for International Settlements (BIS). That evidently puts them outside the long regulatory arm of the central bankers' central bank in Switzerland.

The most renegade of the lot could be Libya and Iraq, the two that have actually been attacked. Kenneth Schortgen Jr, writing on Examiner.com, noted that "[s]ix months before the US moved into Iraq to take down Saddam Hussein, the oil nation had made the move to accept euros instead of dollars for oil, and this became a threat to the global dominance of the dollar as the reserve currency, and its dominion as the petrodollar."

According to a Russian article titled "Bombing of Libya - Punishment for Ghaddafi for His Attempt to Refuse US Dollar", Gaddafi made a similarly bold move: he initiated a movement to refuse the dollar and the euro, and called on Arab and African nations to use a new currency instead, the gold dinar. Gaddafi suggested establishing a united African continent, with its 200 million people using this single currency.

During the past year, the idea was approved by many Arab countries and most African countries. The only opponents were the Republic of South Africa and the head of the League of Arab States. The initiative was viewed negatively by the USA and the European Union, with French President Nicolas Sarkozy calling Libya a threat to the financial security of mankind; but Gaddafi was not swayed and continued his push for the creation of a united Africa.

And that brings us back to the puzzle of the Libyan central bank. In an article posted on the Market Oracle, Eric Encina observed:

"One seldom mentioned fact by western politicians and media pundits: the Central Bank of Libya is 100% State Owned ... Currently, the Libyan government creates its own money, the Libyan Dinar, through the facilities of its own central bank. Few can argue that Libya is a sovereign nation with its own great resources, able to sustain its own economic destiny. One major problem for globalist banking cartels is that in order to do business with Libya, they must go through the Libyan Central Bank and its national currency, a place where they have absolutely zero dominion or power-broking ability. Hence, taking down the Central Bank of Libya (CBL) may not appear in the speeches of Obama, Cameron and Sarkozy but this is certainly at the top of the globalist agenda for absorbing Libya into its hive of compliant nations."

Libya not only has oil. According to the International Monetary Fund (IMF), its central bank has nearly 144 tonnes of gold in its vaults. With that sort of asset base, who needs the BIS, the IMF and their rules?

All of which prompts a closer look at the BIS rules and their effect on local economies. An article on the BIS website states that central banks in the Central Bank Governance Network are supposed to have as their single or primary objective "to preserve price stability".

They are to be kept independent from government to make sure that political considerations don't interfere with this mandate. "Price stability" means maintaining a stable money supply, even if that means burdening the people with heavy foreign debts. Central banks are discouraged from increasing the money supply by printing money and using it for the benefit of the state, either directly or as loans.

In a 2002 article in Asia Times Online titled "The BIS vs national banks" Henry Liu maintained:

"BIS regulations serve only the single purpose of strengthening the international private banking system, even at the peril of national economies. The BIS does to national banking systems what the IMF has done to national monetary regimes. National economies under financial globalization no longer serve national interests.
... FDI [foreign direct investment] denominated in foreign currencies, mostly dollars, has condemned many national economies into unbalanced development toward export, merely to make dollar-denominated interest payments to FDI, with little net benefit to the domestic economies.

He added, "Applying the State Theory of Money, any government can fund with its own currency all its domestic developmental needs to maintain full employment without inflation." The "state theory of money" refers to money created by governments rather than private banks.

The presumption of the rule against borrowing from the government's own central bank is that this will be inflationary, while borrowing existing money from foreign banks or the IMF will not. But all banks actually create the money they lend on their books, whether publicly owned or privately owned. Most new money today comes from bank loans. Borrowing it from the government's own central bank has the advantage that the loan is effectively interest-free. Eliminating interest has been shown to reduce the cost of public projects by an average of 50%.

And that appears to be how the Libyan system works. According to Wikipedia, the functions of the Central Bank of Libya include "issuing and regulating banknotes and coins in Libya" and "managing and issuing all state loans". Libya's wholly state-owned bank can and does issue the national currency and lend it for state purposes.

That would explain where Libya gets the money to provide free education and medical care, and to issue each young couple $50,000 in interest-free state loans. It would also explain where the country found the $33 billion to build the Great Man-Made River project. Libyans are worried that North Atlantic Treaty Organization-led air strikes are coming perilously close to this pipeline, threatening another humanitarian disaster.

So is this new war all about oil or all about banking? Maybe both - and water as well. With energy, water, and ample credit to develop the infrastructure to access them, a nation can be free of the grip of foreign creditors. And that may be the real threat of Libya: it could show the world what is possible.

Most countries don't have oil, but new technologies are being developed that could make non-oil-producing nations energy-independent, particularly if infrastructure costs are halved by borrowing from the nation's own publicly owned bank. Energy independence would free governments from the web of the international bankers, and of the need to shift production from domestic to foreign markets to service the loans.

If the Gaddafi government goes down, it will be interesting to watch whether the new central bank joins the BIS, whether the nationalized oil industry gets sold off to investors, and whether education and healthcare continue to be free.

Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org. In Web of Debt, her latest of eleven books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are http://webofdebt.com and http://ellenbrown.com.

Note: The 2010 UN Human Development Index – which is a composite measure of health, education and income – ranked Libya 53rd in the world, and first in Africa.

Apr 4, 2011

13thnervousbreakdown

http://dailyreckoning.com/a-world-of-leaks-and-full-disclosures/

Ireland's premier, Enda Kenny, has appeared to break down under the strain of trying to avoid bankruptcy. He called a press conference yesterday, [March 31] after Anglo-Irish Bank announced losses of more than 17 billion euros - the largest corporate loss in Irish history.

"I think this has gone on long enough. We tried in good faith to save the system from default and to avoid national humiliation. Instead, the situation just grows more humiliating with each passing week.

"It's time we called a spade a spade...and be done with it. We all know the banks are controlled by the English. And we all know English speculators were behind all of Ireland's recent property problems. They drove up prices. They lent money to Irish people. They built houses that were both ugly and unaffordable. And then, when the bottom fell out of the market, they expected Irish taxpayers to make up their losses.

"Well, that's it. That's the end. Henceforth, all banks and all bank assets are to become the property of the Republic of Ireland. Bank premises will be turned into useful resources for the people, such as pubs or pizza parlors.

"If a bank owes you money...you are out of luck. You should have known better than to put your money in a bank anyway. Everyone knows you can't trust them. Especially when the English are involved with them.

"And don't come running to me telling me that Ireland's default will trigger a wave of defaults across Europe...and possibly bring down the euro and the European Union. I don't want to hear it. It was the European Union that got us into this mess. The frogs and the krauts can go f*** themselves."

***************************

Mr. Enda Kenny is not alone in this. Most nations world wide are afflicted with an over educated and under employed surplus of young people, for whom the prospects look uniformly bleak. More than bleak. By 2015 according to expert calculations in the Guardian, every person in the UK will have debts of 77,000 (seventy seven thousand) sterling. No income, quite possibly, but lots of debt.

[The argument in the Guardian for the 77,000 sterling debt per person by 2015 runs as follows: The GB warlords will continue their efforts to match the US and the French et al in helping in various wars. Although Britain lags far behind, for example the US, (which has fired over a hundred missiles at $1 million a time in Libya to the UK's half dozen) participation in these wars is still more expensive than the UK can afford. Like the US, Britain will pay for this by cutting services previously provided to the population. The populace, to preserve its comfort level, will increasingly borrow large sums to pay for services they wish to keep. Whether this scenario plays out in this form is an open question. It is pure guesswork, and may not happen at all. People may well prefer to do without some of the services, or bodge up a home made alternative, for example. Brutal moves on the authorities themselves are also not entertained, on the Japanese Kata principle that anything never mentioned does not exist.]

Mr. Kenny is perfectly correct on Ireland's debts, which are indeed held mostly by the UK.

So go to it, lads and lasses; you have nothing to lose except mountains of unpayable debt.

Not that you’re alone. Japan’s debt has reached the interesting level of 202 percent of GDP, gross domestic product, or over twice as much as everything the entire country produces in a whole year.

That’s without counting the probable effects of its current nuclear problems. All materials that human ingenuity could devise, including wadded up newspapers, have been tried on the wide gash (about a meter) pumping out highly radioactive water to no effect. Tokyo Electric Company that owns the reactor has decided to let it all run into the ocean.

The Washington (and London) commentariat, being political appointees without necessarily having any expertise in anything whatsoever, have also distinguished themselves. Mr. Monbiot of the London Financial Times, for example, announced himself a convert to nuclear power, and no, he wasn’t being sarcastic. He meant it.

The commentariat, or western assembly of experts, have also distinguished themselves in the matter of Ms. Dilma Roussef, the new lady president of Brazil. “Ah now we’ll see a change from old Lula’s policies,” they predicted in unison. Ms. Roussef, who was imprisoned and tortured by the regime preceding that of Mr. Lula da Silva, has proved to be exactly the reverse of their predictions, however, an even tougher nut than da Silva. (Fortunately for our commentators, being entirely wrong has no effect on their employment or remuneration, since they were appointed for political loyalty. They merely continue to serve up the same fine crapola.)

The latest possibility being considered by the Brazilians is quite awe inspiring, no less than the purchase of all of the debts of Portugal, their previous colonial masters. Brazil can easily afford to do that, and it would demonstrate a generous and forgiving attitude that sets them totally apart from western nations, where the almighty power of cash continues to be worshipped.

Nice one, Ms. Roussef!